Hospital advisor answers questions about LMH affiliation process

Published: Tuesday, June 24, 2014 at 07:27 PM.

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“The real fundamental decision is finding the path that best ensures the future of health care in Lenoir County, whether it’s through a partnership or whether it’s remaining independent,” he said.

He said the hospital spent four months working on specific objectives, which were written on a handout for those present at the Kinston-Lenoir County Public Library.

Objectives include an arrangement that will maintain an acute-care hospital with a full complement of services; expansion of services with a focus on primary care, general surgery and specialty services; and financial investment in critical care, a cancer center and inpatient services, at a minimum.

Other objectives include maximum local control, measurable advancements in clinical and business excellence, enhancing the LMH brand and providing the best cultural fit for the community and its physicians.

“The (LMH) board is taking a very long view of this,” Shields said, “and wanting to position the hospital, not for the next five years or the next 10 years, but to ensure health care as a driver in Lenoir County going into the future.”

Black said the goals and objectives are what will drive the affiliation process, and if those are not met, the process could be restarted.

“Our board is in full and absolute control of the decision-making, the time frame, the deliberations,” he said, “and they have plenty of time.”

About 50 people came to a public meeting to hear about the three affiliation proposals Lenoir Memorial Hospital has received.

LMH President and CEO Gary Black said he was pleased with the interest from the community and the questions they asked.

“I was particularly pleased with the question regarding the continuation of the benefit that our hospital provides the community as a good corporate citizen,” Black said. “And that is important to our board to continue, of course. But the point to me was that people understand that and want it to continue, and are here because they want to express that.”

Out of 23 hospital groups that initially expressed interest, Duke LifePoint Healthcare and Vidant Health have chosen to either purchase outright or form a joint venture with LMH, while Novant Health has proposed a management agreement.

“I think one of these three will help Lenoir County,” she said, “ — the assets they will bring in.”

J. Jordan Shields, vice president of Juniper Advisory, a Chicago-based company that is assisting LMH through the affiliation process, provided some background of the hospital groups that submitted proposals.

“The real fundamental decision is finding the path that best ensures the future of health care in Lenoir County, whether it’s through a partnership or whether it’s remaining independent,” he said.

He said the hospital spent four months working on specific objectives, which were written on a handout for those present at the Kinston-Lenoir County Public Library.

Objectives include an arrangement that will maintain an acute-care hospital with a full complement of services; expansion of services with a focus on primary care, general surgery and specialty services; and financial investment in critical care, a cancer center and inpatient services, at a minimum.

Other objectives include maximum local control, measurable advancements in clinical and business excellence, enhancing the LMH brand and providing the best cultural fit for the community and its physicians.

“The (LMH) board is taking a very long view of this,” Shields said, “and wanting to position the hospital, not for the next five years or the next 10 years, but to ensure health care as a driver in Lenoir County going into the future.”

Black said the goals and objectives are what will drive the affiliation process, and if those are not met, the process could be restarted.

“Our board is in full and absolute control of the decision-making, the time frame, the deliberations,” he said, “and they have plenty of time.”

Questions ensued about Novant. Shields said Novant wouldn’t bring in capital investments, but would help oversee the operations and provide guidance on regulatory issues.

Barbara Perry, an LMH board member, said she is aware Novant owned a couple of hospitals in Charlotte.

Shields said the system has only recently begun to manage medical centers, and Juniper asked them if they would be interested in a joint venture structure or acquisition.

“And their answer was no,” he said, “they are interested in a management agreement in this market.”

Representatives from each of the three systems will meet with LMH’s management team and board in Kinston to answer questions, such as where they see opportunities for growth.

In addition, LMH representatives and community and board members will visit similar-type hospitals under each of the systems to tour and find out if the affiliation has met their expectations in specific situations.

Shields said they have expressed interest in doing so, but they want to meet with the LMH board to discuss the details.

Health systems may bring in cash, assume debts and/or provide capital investments. Only about a third of them select the partner with the highest economic value, and they do so based on their shared objectives, Shields said.

He stressed the board won’t make a decision without fully understanding the financial specifics.

Charles Herring, a retired internist, asked if there has been interest from the UNC hospital system. Shields said he couldn’t comment on any specific system that didn’t submit a proposal.

“What I can commit to, is that we haven’t closed off any conversations,” he said, “and that the hospital ... is committed to maintaining a very open process.”

Shields said if there is interest, it will be made public.

“There will be no back room deal,” he said.

Ray Bouzigard, a retired radiologist, suggested LMH wait to see what happens with the Affordable Care Act before acting.

Shields said the question was addressed “head on” by the board and he believes it’s difficult to see a reversal as the U.S. spends nearly double compared to the next closest industrialized country on health care. Five percent of the gross domestic product goes to hospitals, 17 percent of every dollar goes to health care and the government is looking for efficiency, he said.

“Even if some of the financial impact of the Affordable Care Act and the sequester, which has reduced Medicare funds is softened, the hospital is facing real challenges in their ability, as such a small facility, to address the changing regulatory environment, the changing clinical care environment,” he said. “And to do that as an independent hospital is increasingly difficult.”

Several questions will be addressed later in the process, Shields said.

Theresa Williams, director of Kinston Promise Neighborhood, said she was pleased LMH officials are taking their time to make the best decision. She plans to distribute what she learned at the meeting through her organization’s social media and emails.

A couple of the employees present said they had concerns about their future employment.

Shirley Veilleux, a register nurse, said she’s seen many changes, such as the closing of the skilled nursing unit and laying off skilled workers while bringing in people with less experience.

“I’m just wondering,” she said, “how are we going to get doctors with specialties? What do we have to offer that’s going to draw or attract some of these big hospitals?”

Kim Fields, a Medicare biller in LMH’s Patient Financial Services, said it’s good for the community to be aware of the hosital’s intentions.

“I think it’s a good idea,” she said about the hospital seeking affiliation. “You know, we are a small community hospital, and we do want what’s best for the community. ... I’m very pleased with the choices they’ve made, so far.”

Margaret Fisher can be reached at 252-559-1082 or Margaret.Fisher@Kinston.com. Follow her on Twitter @MargaretFishr.